Wall Street is moving ahead as investors once again hope for a Fed rate cut

*Attention shifts to Fed speakers following Friday’s employment data release.

*Paramount Global rises as bidders await response from the special committee

*Tyson Foods shares are falling on concerns about consumer demand.

* Spirit Airlines drops to record low after earnings release

* The indices have risen: Dow 0.34%, S&P 0.71%, Nasdaq 0.81%.

May 6 (Reuters) – U.S. stock indexes rose on Monday, extending last week’s gains, as investors banked on the Federal Reserve cutting interest rates this year.

The benchmark S&P 500 and the tech-heavy Nasdaq hit their highest levels in three weeks after data on Friday showed US job growth slowed more than expected in April, putting pressure on the US central bank to keep interest rates high for longer. was reduced.

“The economic news has been spot on. It continues to show signs of underlying strength in the economy, allowing earnings growth to continue to support an environment where stock prices can rise,” said Mark Luschini, chief strategist at Janney Montgomery Scott. Philadelphia.

“At the same time, the situation is not so tense that it could again endanger the Fed’s current position.

On Monday, Richmond Fed President Thomas Barkin said current interest rate levels should cool the economy enough to return inflation to the central bank’s target of 2 percent, with labor market strength giving authorities time to wait .

Mr. Barkin, who voted on interest rate policy this year, added that the “bullwhip” of inflation supports the Fed’s targeted interest rate policy.

This comment echoes that of the Fed, which last week indicated that it was in favor of a possible reduction in borrowing costs, but that it wanted to gain “more confidence” in the continuation of the decline in inflation before proceeding with a reduction in interest rates. the interest.

Traders are currently pricing in Fed rate cuts of 46 basis points by the end of 2024, with the first cut expected in September or November, according to LSEG’s rate probability app.

As of 1:58 p.m., the Dow Jones Industrial Average rose 129.72 points, or 0.34 percent, to 38,805.40, the S&P 500 gained 36.30 points, or 0.71 percent, to 5,164.09 and the Nasdaq Composite gained 130.06 points, or 0.81%, to 16,286.69.

Nine of the S&P 500’s eleven sectors gained positive ground. The energy index was among the biggest gainers, rising 1%, thanks in part to U.S. natural gas futures hitting a 14-week high.

14 weeks

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With earnings season in full swing, investors will also be keeping an eye on the quarterly results of major companies such as Walt Disney and Uber this week.

Of the 397 S&P 500 companies that reported earnings through Friday, 76.8% beat analyst estimates, compared with a long-term average of 66.7%, according to LSEG data.

Arm Holdings is another company expected to report earnings this week. It rose 4.6% on Monday as chipmakers generally posted gains.

Micron Technology rose 4.6% after a report said Baird upgraded its shares, and Advanced Micro Devices and Super Micro Computer rose 2.9% and 5.2% respectively, regaining lost ground after disappointing earnings from these two companies last week.

Paramount Global gained 4.9% after the media company ended exclusive negotiations with Skydance Media without reaching an agreement, allowing the special committee to consider other offers from rival bidders.

Tyson Foods fell 8.2% after the meatpacking company beat Wall Street expectations for second-quarter earnings, but warned that consumers were under pressure from persistent inflation.

At the same time, Spirit Airlines hit a low point, down 12%, after reporting its weak second-quarter revenue outlook.

Other airlines, on the other hand, soared, with American Airlines and Southwest Airlines both gaining more than 5%.